Merger Arbitrage Mondays – May 7, 2012

  • May 7, 2012

Merger activity spiked sharply higher with thirteen new deals announced and six closing. Four of the new deals announced are over a billion dollars. We have not seen such frenzied activity since we started reporting on mergers more than two years ago. One of the deals that is not included below is the $792 million takeover offer for satellite imaging products company DigitalGlobe (DGI) by rival GeoEye (GEOY), which was rejected by the board on Sunday. We mentioned insider purchases of GeoEye by private equity fund Cerberus Capital Management in one of our Insider Weekends series of posts.

You can find all the active deals listed below in our Merger Arbitrage Tool that automatically updates itself during market hours.

Deal Statistics:

Total Number of Deals Closed in 2012 58
Total Number of Pending Deals
Cash Deals 41
Stock Deals 10
Stock & Cash Deals 7
Total Number of Pending Deals 58
Total Deal Size $382.18 billion

New Deals:

  1. The acquisition of Sunoco (SUN) by Energy Transfer Partners (ETP) for $5.3 billion in a cash plus stock deal. Under the terms of the transaction, shareholders of Sunoco can either receive $50 in cash, 1.0490 ETP common unit or a combination of $25 in cash and 0.5245 ETP common units for each Sunoco share.
  2. The acquisition of Books-A-Million (BAMM) by The Anderson Family for $48.8 million or $3.05 per share in cash.* Since the Anderson family already owns 53% of the company and Clyde Anderson is the Chairman of the Board, this is essentially a “going private” transaction. The deal has not yet been approved by the board and hence we have not yet included it in the list of pending deals below or in our merger arbitrage spread tool.
  3. The acquisition of Gen-Probe (GPRO) by Hologic (HOLX) for $3.7 billion or $82.75 per share in cash.
  4. The acquisition of PLX Technology (PLXT) by Integrated Device Technology (IDTI) for $330 million in a cash plus stock deal. Under the terms of the agreement, shareholders of PLX Technology will receive $3.50 in cash and 0.525 shares of IDT common stock for each PLX common share outstanding.
  5. The acquisition of Imperial Sugar (IPSU) by Louis Dreyfus Commodities LLC for $203 million or $6.35 per share in cash.
  6. The acquisition of P.F. Chang’s China Bistro (PFCB) by Centerbridge Partners LP for $1.09 billion or $51.50 per share in cash.
  7. The acquisition of Collective Brands (PSS) by a consortium comprised of Wolverine Worldwide (WWW), Blum Capital Partners and Golden Gate Capital for $2 billion or $21.75 per share in cash.
  8. The acquisition of Central Bancorp (CEBK) by Independent Bank Corp (INDB) for $54.8 million or $32.00 per share in cash. According to the press release, “Under the terms of the agreement, 60% of outstanding Central Bancorp., Inc. shares will be exchanged for shares of Independent Bank Corp., at an exchange ratio subject to limited adjustment, and 40% of outstanding Central Bancorp., Inc. shares will be purchased for $32.00 per share in cash.” Since the exchange ratio is subject to adjustment, we are going to treat this as an all cash deal in our arbitrage tool.
  9. The acquisition of EasyLink Services International Corporation (ESIC) by Open Text Corp (OTEX) for $232 million or $7.25 per share in cash.
  10. The acquisition of Charming Shoppes (CHRS) by Ascena Retail Group (ASNA) for $890 million or $7.35 per share in cash.
  11. The acquisition of Standard Microsystems Corporation (SMSC) by Microchip Technology (MCHP) for $939 million or $37.00 per share in cash.
  12. The acquisition of Kensey Nash Corporation (KNSY) by Royal DSM for $38.50 per share in cash.
  13. The acquisition of Alliance Bankshares Corporation (ABVA) by Washington First Bankshares (WFBI.OB) for $24.4 million in a cash plus stock deal. Under the terms of the agreement, shareholders of Alliance Bankshares Corporation will receive, at their election, either 0.4435 shares of WFBI common stock or cash in the amount of $5.30 for each share of Alliance common stock owned, provided that no more than 20% of the Alliance common shares may elect to receive cash.

Updated Deals:

  1. On May 1, 2012, shares of Pep Boys (PBY) fell 25% to $11 after the company reported that the Gores Group is trying to delay the deal following a drop in Pep Boys sales.

Closed Deals:

  1. The acquisition of Midas (MDS) by TBC Corporation on April 30, 2012.
  2. The acquisition of RSC Holdings (RRR) by United Rentals (URI) on April 30, 2012.
  3. The acquisition of LoopNet (LOOP) by CoStar Group (CSGP) on May 01, 2012.
  4. The acquisition of Harleysville Group Inc. (HGIC) by Nationwide Mutual Insurance Company on May 01, 2012.
  5. The acquisition of Convio (CNVO) by Blackbaud (BLKB) on May 03, 2012.
  6. The acquisition of Great Wolf Resorts, Inc. (WOLF) by an affiliate of Apollo Global Management, LLC on May 04, 2012.

Top 10 deals with largest spreads:

Symbol Announced

Date

Acquiring

Company

Closing

Price

Last

Price

Closing

Date

Profit Annualized

Profit

PBY 01/30/2012 The Gores Group (N/A) $15.00 $11.19 06/30/2012 34.05% 230.14%
CADC 10/24/2011 Novel Gain Holdings Limited (N/A) $2.65 $2.12 06/30/2012 25.00% 168.98%
VQ 01/16/2012 Denver Parent Corporation (N/A) $12.50 $10.83 06/30/2012 15.42% 104.23%
GEOI 04/25/2012 Halcon Resources (HK) $38.84 $35.92 09/30/2012 8.12% 20.30%
INCB 01/25/2012 Old National Bancorp Capital (ONB) $23.48 $21.75 06/30/2012 7.97% 53.89%
TUDO 03/12/2012 Youku Inc. (YOKU) $38.31 $36.01 09/30/2012 6.39% 15.98%
CEBK 05/01/2012 Independent Bank Corp. (INDB) $32.00 $30.27 12/31/2012 5.72% 8.76%
ABVA 05/03/2012 Washington First Bankshares (WFBI.OB) $4.77 $4.51 12/31/2012 5.71% 8.76%
TAM 01/19/2011 LAN Airlines S.A. (LFL) $25.08 $24.21 06/30/2012 3.61% 24.37%
SCMF 03/27/2012 Capital Bank Financial Corp (N/A) $2.88 $2.78 06/30/2012 3.60% 24.31%

List of all pending deals:

The list of all pending deals is only available to InsideArbitrage Premium and Plus members.


Voluntary Disclosure: I hold long positions in GeoEye (GEOY) and Motorola Mobility (MMI) in my personal portfolio.